CCPS, or Compulsorily Convertible Preference Shares, are a key element of startup financing. These shares carry certain terms—if an early investor has CCPS, he can have more rights than other investors who come in later at a higher valuation. It also helps investors maintain their stake and have a say even if their stake gets diluted later. However, these shares get converted to ordinary equity shares after 10-15 years. That is more than sufficient time for most startups to give their investors an exit. CCPS also helps founders keep control of a company even if their stake is lower than that of investors.
